In Brief

Germany owes its robust economy of recent years in part to the success of its manufacturing sector, from basic materials to tools on the factory floor.

The reason Germany has remained competitive against cheaper manufacturers in Asia and elsewhere is that it has made good use of new technology.

The Fraunhofer network of technical institutes is an example of how researchers and manufacturers work closely together in industry.

The Germans have excelled in old industries such as automobiles and are building centers of excellence in biotechnology and other emerging areas.

Felix Michl and Philipp Stahl huddle over a gleaming new three-armed robot in the sprawling laboratory at the Technical University of Munich (TUM). The robot picks up tiny patches of carbon fiber, each less than a tenth of a millimeter thick but containing 24,000 filaments, and quickly assembles them into a triangular shape. The trickiest task, the investigators say, is to write the software that translates a 3-D computer model of any part—in this case a bicycle seat, but it could also be a medical prosthesis or an automobile component—into instructions for the robot's intricate movements, including the exact position at which the fibers will have their maximum strength and durability. When the project is completed, Michl will use it in his Ph.D. thesis, and Stahl will finish up his undergraduate studies. But the work will get a second life in German factories, including a 70,0000-square-foot, state-of-the-art BMW production facility 30 miles down the road near the medieval town of Landshut, where engineers are crafting the next generation of automobiles.

At the moment, the Landshut engineers are focused on the BMW i3, which will be the world's first mass-market, all-electric car made from lightweight components if its 2013 launch comes off as expected. The car's passenger compartment is being built entirely out of carbon composites, which researchers and students such as Michl and Stahl are helping to develop in the Munich labs. The core innovation is a new technology that slashes the production time of complex parts such as the car's side frame to as little as two minutes, making these high-tech composites affordable for mass production for the first time. Three gigantic presses, weighing in at 320 metric tons each, inject resin into the preformed carbon-fiber parts, giving them stiffness. BMW says it has a lead in this composite manufacturing technology over competitors such as Toyota or General Motors. “The knowledge we have in bringing all these elements together isn't something our competitors can easily copy,” says BMW project manager Andreas Reinhardt.

That may be. The steady pipeline of innovation that runs from university and government research labs to manufacturers such as BMW is one of the secrets driving the booming German economy. Long belittled as lowly metal bending, German manufacturing sailed through the financial crisis with hardly a dent in profits and employment, even though its workers, among the world's most highly paid, make 10 times what their Chinese counterparts earn. German exports have held their share of the global market against China and other emerging countries, even as the U.S. share has plummeted. Rising industrial employment is one reason Germany, as of May, had a jobless rate of only 5.6 percent compared with America's 8.2 percent, according to the Organization for Economic Co-operation and Development. German manufacturers have stayed globally competitive because their products—like the BMW i3—are chock-full of science and innovation.

One major factor for Germany's success is that it has managed to tap homegrown scientific research and expertise to move up the technological ladder, concentrating on innovative products and processes not easily copied or undercut by cheaper wages. The textile industry is a case in point. Like America, Germany long ago lost the bulk of its clothing and fabrics manufacturing to cheaper locales such as China, India and Turkey. Still, German companies kept a commanding share of the global market for the ever more complex machines that weave, braid and knit textiles, riding the investment boom in low-wage countries. Meanwhile many of Germany's former textile makers also went high-tech, shifting their specialty to industrial textiles for the automotive and aerospace sectors. Today the national textile industry is at the forefront of composites research, cooperating with universities and government tech centers to develop the precision machinery that braids the carbon fibers into strands—not unlike wool or cotton, except on a microscopic scale. Had Germany given up this industry, it would lack the basis for producing those next-generation composites now being developed at TUM and other labs.